Patient South African equity investors are finally being rewarded, after three years of close to zero returns, with a 17% jump in the value of the All Share index over the past 12 months. But before you pop the Kaapse Vonkel, here is a brutal reality check. Despite its welcome surge, in dollar terms you are poorer today than you were in 2007, courtesy of the rand halving in value over that period. Back then, the rand traded around 7/$; today, it's around 14/$. Currency devaluation translates to an extraordinary destruction of wealth. Had you invested instead in the S&P500 over the same period, despite the turmoil of the global financial crisis you would be more than three times better off, in dollars. A million rands converted to dollars in 2007 would have bought you about $143000. Invested in a low-cost S&P index fund, it would be worth about $420000 today. Converted to rands: R5.9-million. Left in rands in the JSE All Share index, your R1-million is now worth about R2-million. Let...
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